Big Supplies Lower Prices
By mid-September, steady improvement in cattle harvest levels over the summer had nearly erased the backlog of cattle created at the onset of the COVID-19 pandemic. With beef packers finding steady profit margins north of $300 per head, cattle prices rallied for seven weeks in July and August.
Increasing production, however, brought the eventual pressure on prices. In September, USDA revised its projections for beef production up 23 million pounds compared with August. That would leave total 2020 beef production at just 0.4% lower than 2019 — despite the disruption.
Smaller 2020 slaughter numbers have been offset by heavier carcass weights, a lingering effect of the cattle stranded in feed yards. The final week of August saw steer carcass weights average 916 lb., up 32 lb. from the same week in 2019.
USDA projects per-capita beef consumption to be 58.2 lb. in 2020, up slightly. But the supply pressure will tend to subside throughout the fall. Seasonally, beef demand improves approaching the holidays, which will support prices in the $110 to $117 per cwt range.
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